SOS Stock Price and forecast: Shorts send out an SOS for help

SOS is a Chinese company involved in providing cloud-based emergency services to businesses and individuals. SOS provides information security solutions for emergency roadside assistance, emergency healthcare, and emergency living assistance. SOS also has an involvement in the cryptocurrency mining business.

SOS Stock Prediction

So it is this last endeavour that has caught the attention of investors, namely cryptocurrency mining. Bitcoin continues to go up up up and mining companies such as RIOT and others have seen strong retail investor interest and as a result stock price appreciation.

SOS has caught the bug and investors have pushed the shares higher. SOS is not without controversy however and has been the subject of two negative articles from short-sellers, the company refuted these and Scorpio VC published a positive note subsequently also.

Feb 11 saw the bullish fever really take hold as SOS Ltd jumped nearly 60%. This was likely on the back of an announcement made by SOS Ltd on February 9 that it had received five thousand pieces of mining rigs for cryptocurrency. SOS Chairman Yandai Wang commented, "we have secured supply of crypto mining equipment that is expected to generate sufficient crypto hash power to allow us to promptly capture the rising cryptocurrency price.” 

On February 9 SOS shares opened at $3.80 and by February 17 they had hit a high of $17.88. 

On February 12 according to Benzinga SOS priced 22 million shares at $5 to raise $110 million. Also in February on the 18th Benzinga further reported the company announced a raise of $86 million in a secondary offering of 8.6 million shares at $10 a share. 

On February 24 SOS announced the second delivery of 5,000 pieces of crypto mining. During February the price of Bitcoin was appreciating sharply so this was timely news for investors. 

Culper Research also issued a note on February 26 saying "We are short SOS Ltd. (NYSE:SOS), (“SOS”, “the Company”). SOS is a China-based reverse merger which has languished since its April 2017 IPO until its torrent of crypto-related hype has taken shares up over 600% at their peak. However, we find the Company’s claims regarding its supposed cryptocurrency mining purchases and acquisitions to be extremely problematic, if not fabricated entirely. Meanwhile, insiders – including Chairman Yandai, Wang Yilin, CFO Li Sing Leung, and Jonathan Zhang – as well as the Company’s largest shareholders are already selling their shareholdings as of filings made as early as February 2 and as recently as 3 days ago. We think the ship is already sinking and there’s nothing worth saving. We’re short SOS and believe shares are worthless".

Shares in SOS Ltd fell over 20% on Feb 26 to close at $4.77

SOS Ltd issued a response to the short-sellers on March 1

"QINGDAO, China, March 1, 2021 -- SOS Limited (NYSE: SOS) (the "Company" or "SOS") was recently attacked by short sellers with distorted, misleading, and unsubstantiated claims regarding the Company. The Company also believes certain social media accounts of some Company board members may have been impersonated or disabled for short periods of time. The Company believes these attacks were purposefully designed to manipulate the price of the Company’s shares, with the aim of causing a stock price decline in order to economically benefit the short sellers, to the detriment of the Company’s public shareholders.

SOS stands behind the integrity of the Company and remains committed to maintaining transparency and the highest ethical principles. SOS reserves all rights that it may have against these short sellers and will defend itself vigorously against those behind these attacks and misleading allegations. The Company is preparing a more detailed response to the false innuendo and lies that are being spread about the Company. SOS looks forward to vigorously defending itself, addressing these matters and providing more information in the coming days".

Shares in SOS Ltd recovered sharply to close up over 40% at $6.69 on Monday, March 1. Since then SOS shares consolidated around $7 before yesterday (Monday March 15) seeing another big appreciation. SOS shares surged by over 20%, above $8 as SOS announced it had installed an extra 5,000 pieces of crypto mining rigs. SOS also said it was awarded its first Bitcoin on Feb 24 as a result of successful mining activities. SOS said it expects to mine at least 41 bitcoins and 909 etherum in Q1 2021. On Tuesday in early pre-market trading SOS shares are trading at $8.02. 

Where to from here. Well technically SOS shares are in a consolidation phase and need to fill the gap up to c.$9.80. A break out up to this level brings old highs near $13 as the next resistance. Support is at $6 and a break of that would see the next support at just under $5.

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